The Tories' plans to cut taxes and increase public spending don't add up

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This time last week, Tony Blair was being widely excoriated for misrepresenting Tory spending plans. The Prime Minister had insinuated that the Conservative economic proposals would mean sacking every teacher, nurse and GP in the country. The charge did not stick, and the Tories managed to make some political capital out of Mr Blair's perceived mendacity. But now the positions have been reversed.

This time last week, Tony Blair was being widely excoriated for misrepresenting Tory spending plans. The Prime Minister had insinuated that the Conservative economic proposals would mean sacking every teacher, nurse and GP in the country. The charge did not stick, and the Tories managed to make some political capital out of Mr Blair's perceived mendacity. But now the positions have been reversed.

Michael Howard announced yesterday that Howard Flight, the deputy Conservative chairman, will not be a Tory candidate in the forthcoming general election. Mr Flight's crime was to contradict his party's public position in a speech to some right-wing activists. This might have gone unnoticed had his comments not been about the highly sensitive area of tax cuts. Mr Flight hinted that the James report - commissioned by the Tories to look into ways of cutting waste in the public finances - is merely a political fig leaf. What the Tories really want to do, Mr Flight seemed to suggest, is to cut public spending and deliver significant tax cuts.

This is a undoubtedly a setback for the Tory campaign, which is why Mr Howard acted so quickly yesterday to remove the party whip from Mr Flight. The Tories have gone to great pains to emphasise that, if elected, they would not only match Labour's spending in key public services such as health and education, but also spend more. Mr Flight's comments undermine the credibility of that claim. Was it a momentary slip of the tongue? It hardly matters. The damage has been done.

Mr Flight's gaffe not only makes the Tories look distinctly amateurish - it also draws attention to the sketchy nature of their financial calculations. According to the James report, there is £35bn of waste in the public sector. That is by no means an unlikely estimate. Gordon Brown himself has identified £21bn of savings. But it stretches belief for the Tories to argue that it will be simple for them to cut £35bn and then to use the savings to finance tax cuts. As the Liberal Democrats have pointed out, the Tories are effectively proposing to cut deficits, cut taxes and increase public spending all at the same time. This has a distinct air of pie in the sky.

But it would be wrong to attach too much significance to Mr Flight's unfortunate remarks and the panicked reaction of his political masters in the Tory party. The majority of the public is well aware that the Tories are philosophically in favour of lower taxes. Mr Flight's comments will not have come as any great surprise. The truth is that the Conservatives have tied themselves up in knots by attempting to match Labour's spending on public services. But this Dutch auction approach to fiscal policy is futile. The real question ought to be about how to give taxpayers better value for their spending on public services. There is nothing intrinsically wrong with the Tories being in favour of reduced taxation. But unless this is combined with realistic proposals of how to make our monolithic public services more efficient, it looks like cynical short-termism. The Tories have failed to offer such a programme. It is this, rather than Mr Flight, that lies at the heart of their problems.

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